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08-04-16, 11:22
The most underrated neighbourhood in S’pore
Apr 07, 2016 04.10PM | Ryan Ong
by Ryan Ong
TELL your friends “let’s hang out at Paya Lebar”, and they’ll ask if you’ve taken your pills this morning. Let’s face it – for donkey’s years, Paya Lebar may as well have been the Twilight Zone. Ask residents in the east, and they’ll identify it as “that post office I cross between work and home.” But with the Paya Lebar hub set to be completed this year, you’d think all of that would change…right?
The mystery of Paya Lebar
Paya Lebar might be the most underrated place in Singapore this year. The Urban Redevelopment Authority (URA) has marked it for development into a non-central business hub, much like Jurong. The centre of this hub will be Paya Lebar Central (PLC).
The development of PLC is a joint venture between Abu Dhabi Investment Authority (ADIA) and Aussie developer LendLease. The development will be attached to the Paya Lebar MRT station, and consist of three office towers, around 500,000 square feet of retail space, and some 429 residential units.
In addition, the iconic Singapore Post Centre (SPC) is also undergoing a $150 million renovation. SingPost intends to turn the building into the biggest e-commerce mall in Asia. This will be the first ever mall to mix brick-and-mortar businesses with online retailers.
Paya Lebar is also close to the Sports Hub, and recently saw the arrival of One Knowledge Mall (One KM), which many regard as the first “real” mall in the area. ONE KM focuses on enrichment and tuition centres for its tenants, which caters to the nearby residences.
The cherry on top of all this? Paya Lebar is 10 minutes from Raffles Place via MRT.
That should be a recipe for skyrocketing rent and property values. But instead, the place still seems to be quiet. According to PropNex Research, from Q1 of 2013 to Q1 of 2015, average transaction prices for private condos showed only a small increase. In 2013, the average transaction price was $1,299 per square foot. As of 2015, it was up around 3.3 per cent at $1,342 per square foot.
(Average rental rates actually fell, from $3.64 per square foot to $3.33 per square foot in the same period.)
But Q1 2015 was a long time ago, so I tried to find something more recent. I looked up URA transaction records for Paya Lebar Residences, a condo in the area.
The only listed transaction from 2014 showed a price of $1,151 per square foot. In 2015, transaction prices decreased: from a recorded sale of $1,106 per square foot in March, to a sale at $1,016 per square foot in December.
On top of that, I did a quick walk-around in One KM last week. I found 17 shoppers who were Paya Lebar residents. Three knew about the plans for a Paya Lebar Business Hub.
So why the “meh” attitude towards Paya Lebar?
Stealing Paya Lebar’s thunder
The transformation of Paya Lebar into a business hub is supposed to be complete by the end of 2016, although PLC will be complete only in 2018. It’s usually around this time that investors, home buyers, etc. get worked up and prices rise.
But a number of situations have conspired to make the Paya Lebar Business Hub utterly unexciting to many. These are:
• A general slump in the property market
• The demand for office space is on the decline
• Jurong is hogging the limelight
• Paya Lebar has gone a long time without a distinct identity
1. A general slump in the property market
The property market has been in a slump as of late, with measures such as the Additional Buyers Stamp Duty (ABSD) pulling prices down. A downward pressure on property prices.This is also being contributed by the high number of job layoffs among Professionals, Managers, Executives and Technicians (PMETs) – one of the main demographics that can afford private property, and rising interest rates on property loans.
I had an informal chat with a property agent, who declined to be named. He agreed that its difficult for prices to rise in the current environment, whatever the future outlook for Paya Lebar. But he added that “it may not be right say there’s lack of interest due to the price movements, because it’s possible that the business hub was already factored into prices long ago.
“I recall people talking about Paya Lebar business hub as far back as 2008 .”
Nonetheless, he thinks the main reason is “buyers will hold off because they assume prices will drop further. Fewer people are interested buying right now, even if in theory they understand that PLC will raise property values.”
2. The demand for office space is on the decline
What about non-residential issues? Well The Straits Times reported that half the offices in Paya Lebar Square are empty right now, following its completion in 2014. And yet this was one of the fastest selling projects in 2012.
Now declining demand for office space is happening everywhere; in fact, Daiwa Securities Co. recently asserted that office rents may fall by as much as 25 per cent by end 2018. This is a symptom of a weak global economy, as businesses begin to scale back. And over the long term, office space becomes less of a necessity as more and work goes online.
Now Paya Lebar is a business hub. The three towers of office space in PLC was one of the main highlights. Unfortunately, it seems that more office space may not be something anyone needs right now, hence the muted levels of excitement.
3. Jurong is hogging the limelight
Earlier, I mentioned that three of the 17 residents I spoke to were aware of Paya Lebar becoming a business hub. All of them knew about Jurong, however. This is due to the Jurong Innovation District being announced at Budget 2016, as well as the longstanding buzz about Jurong Gateway. Then there’s the fact that the planned High Speed Rail (HSR) terminus is supposed to be located in Jurong.
Between Paya Lebar and Jurong as alternative commercial centres, it’s clear that Jurong is the rock star project.
4. Paya Lebar has gone a long time without a distinct identity
Paya Lebar’s problem is its mix-and-match hodge-podge of retail, office, and residential spaces. For a long time, it lacked a strong distinct identity.
For example, we equate Jurong with heavy industry, Katong with food, Orchard with shopping, etc. But Paya Lebar’s only real distinguishing trait has been a big post office. The idea of Paya Lebar being a major hub, an alternative CBD, might still seem foreign and improbable to many Singaporeans.
The idea of a Paya Lebar business hub may remain an abstraction, until it’s built and we actually see it happening. But in the meantime, this project has flown way under the radar considering how big it is.
Apr 07, 2016 04.10PM | Ryan Ong
by Ryan Ong
TELL your friends “let’s hang out at Paya Lebar”, and they’ll ask if you’ve taken your pills this morning. Let’s face it – for donkey’s years, Paya Lebar may as well have been the Twilight Zone. Ask residents in the east, and they’ll identify it as “that post office I cross between work and home.” But with the Paya Lebar hub set to be completed this year, you’d think all of that would change…right?
The mystery of Paya Lebar
Paya Lebar might be the most underrated place in Singapore this year. The Urban Redevelopment Authority (URA) has marked it for development into a non-central business hub, much like Jurong. The centre of this hub will be Paya Lebar Central (PLC).
The development of PLC is a joint venture between Abu Dhabi Investment Authority (ADIA) and Aussie developer LendLease. The development will be attached to the Paya Lebar MRT station, and consist of three office towers, around 500,000 square feet of retail space, and some 429 residential units.
In addition, the iconic Singapore Post Centre (SPC) is also undergoing a $150 million renovation. SingPost intends to turn the building into the biggest e-commerce mall in Asia. This will be the first ever mall to mix brick-and-mortar businesses with online retailers.
Paya Lebar is also close to the Sports Hub, and recently saw the arrival of One Knowledge Mall (One KM), which many regard as the first “real” mall in the area. ONE KM focuses on enrichment and tuition centres for its tenants, which caters to the nearby residences.
The cherry on top of all this? Paya Lebar is 10 minutes from Raffles Place via MRT.
That should be a recipe for skyrocketing rent and property values. But instead, the place still seems to be quiet. According to PropNex Research, from Q1 of 2013 to Q1 of 2015, average transaction prices for private condos showed only a small increase. In 2013, the average transaction price was $1,299 per square foot. As of 2015, it was up around 3.3 per cent at $1,342 per square foot.
(Average rental rates actually fell, from $3.64 per square foot to $3.33 per square foot in the same period.)
But Q1 2015 was a long time ago, so I tried to find something more recent. I looked up URA transaction records for Paya Lebar Residences, a condo in the area.
The only listed transaction from 2014 showed a price of $1,151 per square foot. In 2015, transaction prices decreased: from a recorded sale of $1,106 per square foot in March, to a sale at $1,016 per square foot in December.
On top of that, I did a quick walk-around in One KM last week. I found 17 shoppers who were Paya Lebar residents. Three knew about the plans for a Paya Lebar Business Hub.
So why the “meh” attitude towards Paya Lebar?
Stealing Paya Lebar’s thunder
The transformation of Paya Lebar into a business hub is supposed to be complete by the end of 2016, although PLC will be complete only in 2018. It’s usually around this time that investors, home buyers, etc. get worked up and prices rise.
But a number of situations have conspired to make the Paya Lebar Business Hub utterly unexciting to many. These are:
• A general slump in the property market
• The demand for office space is on the decline
• Jurong is hogging the limelight
• Paya Lebar has gone a long time without a distinct identity
1. A general slump in the property market
The property market has been in a slump as of late, with measures such as the Additional Buyers Stamp Duty (ABSD) pulling prices down. A downward pressure on property prices.This is also being contributed by the high number of job layoffs among Professionals, Managers, Executives and Technicians (PMETs) – one of the main demographics that can afford private property, and rising interest rates on property loans.
I had an informal chat with a property agent, who declined to be named. He agreed that its difficult for prices to rise in the current environment, whatever the future outlook for Paya Lebar. But he added that “it may not be right say there’s lack of interest due to the price movements, because it’s possible that the business hub was already factored into prices long ago.
“I recall people talking about Paya Lebar business hub as far back as 2008 .”
Nonetheless, he thinks the main reason is “buyers will hold off because they assume prices will drop further. Fewer people are interested buying right now, even if in theory they understand that PLC will raise property values.”
2. The demand for office space is on the decline
What about non-residential issues? Well The Straits Times reported that half the offices in Paya Lebar Square are empty right now, following its completion in 2014. And yet this was one of the fastest selling projects in 2012.
Now declining demand for office space is happening everywhere; in fact, Daiwa Securities Co. recently asserted that office rents may fall by as much as 25 per cent by end 2018. This is a symptom of a weak global economy, as businesses begin to scale back. And over the long term, office space becomes less of a necessity as more and work goes online.
Now Paya Lebar is a business hub. The three towers of office space in PLC was one of the main highlights. Unfortunately, it seems that more office space may not be something anyone needs right now, hence the muted levels of excitement.
3. Jurong is hogging the limelight
Earlier, I mentioned that three of the 17 residents I spoke to were aware of Paya Lebar becoming a business hub. All of them knew about Jurong, however. This is due to the Jurong Innovation District being announced at Budget 2016, as well as the longstanding buzz about Jurong Gateway. Then there’s the fact that the planned High Speed Rail (HSR) terminus is supposed to be located in Jurong.
Between Paya Lebar and Jurong as alternative commercial centres, it’s clear that Jurong is the rock star project.
4. Paya Lebar has gone a long time without a distinct identity
Paya Lebar’s problem is its mix-and-match hodge-podge of retail, office, and residential spaces. For a long time, it lacked a strong distinct identity.
For example, we equate Jurong with heavy industry, Katong with food, Orchard with shopping, etc. But Paya Lebar’s only real distinguishing trait has been a big post office. The idea of Paya Lebar being a major hub, an alternative CBD, might still seem foreign and improbable to many Singaporeans.
The idea of a Paya Lebar business hub may remain an abstraction, until it’s built and we actually see it happening. But in the meantime, this project has flown way under the radar considering how big it is.